Capital One (COF) Stock Down, Q2 Earnings Fall Short

Capital One (COF) stock is declining on Friday afternoon after the company reported lower-than-expected earnings for the 2016 second quarter.
By Kaya Yurieff ,

NEW YORK (TheStreet) -- Shares of Capital One Financial (COF) - Get Report are retreating 1.38% to $67.05 on heavy trading volume Friday afternoon after the financial holding company reported weaker-than-expected earnings for the 2016 second quarter.

After yesterday's closing bell, the McLean, VA-based company posted adjusted earnings of $1.76 per share, below analysts' estimates of $1.86 per share.

Revenue for the quarter was $6.25 billion, while Wall Street was projecting $6.28 billion.

"We remain well positioned to deliver growth and returns at the higher end of banks and distribute significant capital to shareholders, subject to regulatory approval," CEO Richard Fairbank said in a statement.

BMO Capital Markets lowered its price target to $102 from $108 and maintained its "outperform" rating on the stock after the results.

Higher-than-expected credit costs were to blame for the miss, according to the firm.

"COF's 2Q16 credit metrics (e.g., Domestic Card charge-offs of 4%) and loan growth (of+12% YOY) were in line with our forecasts, yet provisions for credit losses came in much higher ($1,538 million versus our $1,376 million estimate), because management foresees stronger loan growth (than we had) over the next twelve months," BMO wrote in an analyst note.

About 5.67 million of the company's shares changed hands so far today vs. its average 30-day volume of 4.86 million shares per day.

Separately, TheStreet Ratings Team has a "Buy" rating with a score of B- on the stock.

The company's strengths can be seen in multiple areas, such as its revenue growth, attractive valuation levels, good cash flow from operations and largely solid financial position with reasonable debt levels by most measures.

The team believes its strengths outweigh the fact that the company has had sub par growth in net income.

Recently, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author.

You can view the full analysis from the report here: COF

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